Brokerages pick 30 stocks to play the growth story promised by FM in Budget 2021

Market Outlook

Investors should stay invested, particularly in sectors like financials especially private sector banking IT, pharma, autos, cement and segments of FMCG. Domestic cyclicals appear to be strong bets.

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As promised by her, Finance Minister delivered ‘a Budget like never before’ on February 1. And the Dalal Street responded with similar enthusiasm. The Budget was focused on growth to boost the economy. No hike in the direct taxes, which investors feared, focus on healthcare as well as insurance, and announcements related to banking were the highlights of a path-breaking Budget.

Experts give a thumbs up to the Budget as it will play a key role in pushing the economy back on the recovery path and boost corporate earnings. Investors should bet on specific stocks that are likely to benefit the most from the growth journey.

“The FY22 budget has turned out to be a landmark budget with the government meeting the sky-high expectations of equity markets and the general public. The focus of the government is clearly on spending to revive the economy without major changes in the taxation structure,” B Gopkumar, MD & CEO, Axis Securities told Moneycontrol.

“The government is doing quality spending with focus on infrastructure, healthcare, and key social programs. The fiscal deficit is pegged at 6.8% for FY22, which is clearly expansionary and will aid the economy significantly,” he said.

He further added that the proposals for the financial sector which include privatization of public banks and asset reconstruction company are also significant positives for the financial sector. Overall, the budget has checked most of the boxes and will help the economy.”

Not only largecaps, but mid & smallcap stocks also participated in the rally. NiftyBank touched a fresh record high above 34000 for the first time. Experts advise investors to stay with stocks in economy-lined sectors that are likely to gain the most from Budget proposals.

“The 5% thumps up given by the Sensex reflects the market’s resounding approval of the bold reform-growth-orientation of the budget. Like the 1991 Budget which initiated liberalization in India, this budget marks a clear turn to the right in economic policy in India,” Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.

“The stage is set for India embracing privatization in right earnest. There are concerns regarding the high fiscal deficit. Also, implementation holds the key in achieving the targets,” he said.

Vijayakumar further added that investors should stay invested, particularly in sectors like financials especially private sector banking ( PSU banks will give trading opportunities) IT, pharma, autos, cement and segments of FMCG. Domestic cyclicals appear to be strong bets.

We have collated a list of stocks that are likely to benefit the most as recommended by various brokerage firms:

Brokerage Firm: ICICIDirect

Larsen & Toubro, UltraTech Cement

Budget allocation of Rs 5.54 lakh crore for infrastructure spending, Rs 2 lakh crore to states & further Rs 20000 crore for setting up DFI should create a robust tendering opportunity for L&T.

Narayana Hrudayalaya, Apollo Hospital, Shalby

Proposes PM AtmaNirbhar Swasth Bharat Yojana to be launched at an outlay of about Rs 64,180 crore over six years. Among others, it includes establishing critical care hospital blocks in 602 districts and 12 central institutions.

We expect the government to involve private hospital players via the PPP model as proposed by the Niti Ayog in sync with NHP 2017.

KPR Mill, Gokaldas Exports, Arvind

To enable the textile industry to become globally competitive, a scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme.

This will create a world-class infrastructure with plug & play facilities to enable create global champions in exports. Seven textile parks will be established over three years.

Ashok Leyland, Tata Motors, JK Tyre, Apollo Tyres

The Budget extended support to the commercial vehicle space through the allocation of Rs 18,000 crore for procurement of over 20,000 buses for urban transport.

It is aimed to be implemented deploying PPP model. 2) Announcement of voluntary scrappage policy for commercial vehicles >15 years of age and private vehicles >20 years of age.

Indraprastha Gas, Mahanagar Gas, Gujarat Gas, Adani Total Gas & GAIL

In the next three years, 100 districts will be added to the existing CGD network. The addition of new areas will provide an incremental opportunity for volume growth for CGD companies.

PNC Infratech, KNR Construction

Increase in roads & highways CAPEX allocation by ~17% YoY at Rs 1,08,230 crore to boost order inflows for road EPC players.

Supreme Industries, Astral Poly

In Jal Jeevan Mission for Urban households, the government would be setting up 2.86 crore water tap connection at an outlay of Rs 2.87 lakh crore over the next five years. This would benefit plastic pipe companies with incremental demand of PVC pipes.

Brokerage: IIFL Securities


ICICI Bank, India’s second-largest private bank, is among the few banks that have a manageable asset quality positions and a strong provisioning buffer. The bank is aiming to focus on data, analytics and technology to drive growth and improve productivity and efficiency.

The rising share of retail loans continues to drive the overall loan growth and ICICI Bank is strongly positioned to maintain this momentum and further witness margin expansion.


ITC is one of India’s foremost private sector companies with a diversified presence across businesses. It is a market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging, and Agri-Exports and, it is rapidly gaining market share even in its nascent business of FMCG.

“We believe that ITC is a beneficiary of nil tax increase in this budget vs. 11-16% increase in the past year. Its FMCG business is on a strong footing and is primed for margin expansion on account of scale benefits,” said the report.

Dabur India:

Dabur India has a highly diversified portfolio and is witnessing market share gains in core categories as well as sustained growth momentum in the healthcare portfolio.

The focus on strengthening distribution and new launches are likely to aid revenue growth going ahead. Dabur has shown strong volume growth performance among FMCG peers.

SBI Life Insurance:

SBI Life is India’s largest private life insurer on a retail APE basis. The company has a product mix of participating, non-participating, and linked policies, with the mix skewed towards linked products.

SBI Life can deliver top-quartile growth helped by a favourable base, backed by well-diversified distribution, rational cost structure, and an under-penetrated mass customer base.

ICICI Lombard General Insurance

Market share improvement continues in motor and fire; ICICI Lombard’s GDPI was driven by 47 percent YoY growth in fire due to last year’s price hikes by reinsurers, though motor also saw growth, of 12 percent YoY, significantly better than the industry.

Health declined 8 percent YoY primarily due to a decline in its benefits portfolio, which is linked to disbursements by banks/NBFCs.

The management sounded confident about growth across segments during the rest of the year and would continue to invest in growth initiatives.

Deepak Nitrite

DNL is a promising play amidst anti-China backlash as it is backward-integrated all the way to basic raw materials sourced largely locally, and competes with Chinese suppliers in several of its products.

JK Lakshmi Cement

The company has announced clinker and grinding capacity expansion at its existing plant in Rajasthan. The capacity is expected to get commissioned in FY23E, which can drive overall volume growth. Moreover, the improved profitability will enable the company to fund expansion via internal accruals.

Sudarshan Chemical

Sudarshan Chemical Industries (SCIL) has grown to become India’s largest manufacturer of colour pigments. Its estimated market share in India stands at ~35 percent.

Out of Rs 3.6bn (`1.5bn in FY21E and `2.1bn in FY22E), 70 percent of the capex will be towards growth projects while the remaining CAPEX is towards backward integration and set-up of utility infrastructure.

HG Infra Engg

HG Infra is the leading Indian highway contractor based in Jaipur, Rajasthan. The company is executing 33 projects across seven states in India.

The company has submitted bids for Rs 140 bn worth of projects and would bid for another `350bn in the next two months, with Management targeting Rs 35-40bn of new order wins in 4QFY21. The management also intends to bid for railways and water supply projects worth Rs 40 bn.

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